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Overview |
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Risk Assessment for P3 |
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Financial Structuring and Assessment for P3 |
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Opportunities and Challenges Series |
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Location |
San Diego County, California |
Project Sponsor / Borrower |
Caltrans South Bay Expressway, LLC (formerly South Bay Expressway, L.P.) |
Program Areas |
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Fiscal Year Approved |
Fiscal Year 2003, amended and restated in 2011 (see below for further information) |
Mode |
Toll Highway |
Description |
South Bay Expressway (SBX) toll road is a 9.2-mile privately-developed southern extension of SR 125, extending from San Miguel Road in Bonita near the Sweetwater Reservoir to SR 905 in Otay Mesa, near the International Border. SBX connects the only commercial port of entry in San Diego to the regional freeway network. This project, made possible through an innovative public-private partnership, completes the missing link in San Diego's third north-south freeway corridor. SBX connects Otay Mesa, the largest area of industrial-zoned land remaining in San Diego County, with eastern Chula Vista and points north and east, reducing commute times and providing convenient access to downtown San Diego, Sorrento Valley, Santee, I-8 and I-15, and Mexico. SBX was developed pursuant to California's AB 680 legislation passed in 1989. Under the franchise agreement, the private developer raised capital for the Project and constructed the road in exchange for a 35-year toll concession. Caltrans owns the highway, but leases the road back to the franchisee. Control will revert back to Caltrans in 2042. In conjunction with the construction of the toll road, two local government-funded projects at the northern end of the toll road known as the "Gap and Connector" were built to link SBX to the existing San Diego freeway network. SBX offers cash and credit card payment as well as electronic toll collection through the FasTrak system. Construction was performed under a design-build contract. |
Cost |
$658 million |
Funding Sources |
Construction Period Financing:
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Project Delivery / Contract Method |
35-year Build-Transfer-Operate franchise with the State of California that allows concessionaire to set market rate tolls |
Private Partner |
South Bay Expressway, L.P. (SBX LP), formerly owned by Macquarie 125 Holdings, Inc. and Macquarie Infrastructure Partners. (These entities were the original developer and equity holders, respectively. See below for current ownership.) |
Project Advisors / Consultants |
Nossaman, Guthner, Knox & Elliott, LLP - Special Counsel to SBX USDOT TIFIA JPO Advisors
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Lenders |
Senior lenders (syndicated group of 10 banks); USDOT TIFIA |
Duration / Status |
Opened to traffic in November 2007 |
TIFIA Credit Assistance |
Direct Loan: $140 million The TIFIA loan is secured by a priority security interest in all project collateral, including, but not limited to: (a) all income, tolls, revenues, rates, fees, charges, rentals, or other receipts derived by or related to the operation or ownership of the project including all amounts from joint development or leasing of air space lease rights; (b) any revenues assigned to the Borrower and proceeds of the sale or other disposition of all or any part of the project; and (c) all income derived from permitted investments. |
Financial Status / Financial Performance |
Financial close May 22, 2003 TIFIA credit agreement signed May 22, 2003 On March 22, 2010, SBXLP filed for bankruptcy under Chapter 11 of the Bankruptcy Code. With accrued interest, the outstanding balance of the TIFIA loan at the time of the bankruptcy filing was $172 million and, pursuant to TIFIA statutory requirements, TIFIA's lien is at parity with that of the Bank Lenders. The senior lien of TIFIA and the bank lenders was confirmed by the Court during the bankruptcy process. The SBX LP bankruptcy filing was primarily the result of the financial burden of claims by the contractor against the Project, including the costs associated with the defense of litigation. The Project's financial condition has also been impacted by lower revenues than anticipated due to the economic downturn. On December 30, 2010, SBX LP filed a Plan of Reorganization (Plan) with the Bankruptcy Court, pursuant to which SBX LP was converted to a Delaware limited liability company, South Bay Expressway, LLC, and the debt of the Bank Lenders and TIFIA was restructured. The Bankruptcy Court confirmed the Plan on April 14, 2011, which includes the settlement of all litigation matters with the contractor, Caltrans, and certain other parties. Under the Plan, TIFIA's secured claim is $99 million, of which approximately $93 million is debt (the new loan amount) and $6 million is equity. TIFIA's unsecured claim is $73 million, or 42 percent of the $172 million outstanding balance. All future toll revenues will be shared pro rata between TIFIA (32 percent) and the Bank Lenders (68 percent). In addition, TIFIA will share pro rata with the Bank Lenders in any equity distributions. The Bank Lenders and TIFIA hold 100 percent of the restructured debt and own all of the equity in the reorganized company. Although DOT wrote down a portion of the principal balance, TIFIA is scheduled to recapture more than 90 percent of the original loan by the final maturity date of 2042 through higher interest rates. The reorganized company, South Bay Expressway, LLC, emerged from bankruptcy on April 28, 2011, concurrent with the financial close of the restructured loans. |
Innovations |
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Related Links / Articles |
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Contacts |
South Bay Expressway |
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